Brown offers pension deal to unlock transit funds

Gov. Jerry Brown has offered the Obama administration a compromise that would keep $1.6 billion in federal transit dollars flowing into California in return for temporarily exempting unionized public transportation workers from being forced to contribute more to their pensions.

The deal would clear the way for about $54 million in transit money to reach the San Diego region.

Brown and lawmakers on Wednesday unveiled legislation to appease the U.S. Department of Labor, which is threatening to cut off transit grants because California allegedly violated federal law by including transportation workers in a 2012 public employee pension overhaul.

The measure would exempt for one year thousands of transit workers from the pension law while the courts decide whether the state acted legally. Brown would also set aside up to $26 million to help transit agencies cover any immediate grant losses if it comes to that.

“This is a very good resolution,” said Paul Jablonski, chief executive officer of the San Diego Metropolitan Transit System, which stood to lose about $25 million. “It allows the federal money to flow to transit systems yet the issue will have its day in court.”

Jablonski said MTS is counting on those federal dollars primarily for its El Cajon bus maintenance facility and to help bring in a fleet of 50 new buses.

MTS is not the only local agency with dollars at stake, The San Diego Association of Governments estimates that it could lose about $29 million if a deal cannot be reached.

In a statement, SANDAG said it “has not yet received word on whether its application for $29 million in federal transit grant funding has been certified, but we are cautiously optimistic given the latest developments.”

Department of Labor spokesman Michael Trupo issued a statement signaling that transit agencies probably will be able to count on the money as long as the legislation becomes law.

“While each grant application must be reviewed individually, if legislation along the lines of what we have discussed with the governor is enacted, it will temporarily resolve the conflict,” he said. “This would allow the Department of Labor to certify federal transit grants so that funds can flow to local transit agencies as quickly as possible.”

As far as litigation is concerned, “if lawsuits are filed, the department will look forward to presenting our legal analysis,” Trupo said. The state pension reforms, Trupo said, “are in conflict with federal law.”

That conflict is rooted in the hard-fought cost-cutting that Brown secured to help rein in spiraling pension liabilities. Under that law, state workers began paying more into their pensions after Jan. 1. Newly hired employees will collect less and wait longer for their retirement benefits.

Transit unions immediately filed protests, saying they should be exempt under a federal law that protects them from contract changes that are not negotiated directly with them.

Their arguments can be traced back to two milestone pieces of federal legislation. Most recently, the Federal Transit Act of 1970 requires the labor department to uphold collective-bargaining rights, using transit dollars as leverage. That act was born out another federal measure signed nearly 50 years ago by President Lyndon Johnson. The Urban Mass Transportation Act of 1964 tied money for public transit to the condition that transit agencies preserve workers’ collective-bargaining rights.

The umbrella Amalgamated Transit Union based in Washington, D.C., issued a statement calling Brown’s proposal “a measured approach to protect the rights of employees and to ensure that urgently needed transit funding to California continues to flow.”

Nevertheless, the bill may not have a smooth course. It will require a two-thirds majority to take effect immediately. That means Democrats must coax a few votes out of Republicans, who have long argued for more — not less — pension concessions from unions. Republican leaders did not immediately respond to requests for comment.

The Labor Department’s Trupo noted that the federal move is rare. Since 1998 the department has approved 28,000 grants without a single rejection, he said.

Brown has been in talks with the Labor Department for months. He wrote a May 29 letter to then-Acting Labor Secretary Seth Harris, defending his efforts to stabilize pension costs.

“Our pension reform does not impair bargaining rights. To the contrary, it enhances retirement security for public employees by keeping pension plans from becoming unsustainable,” the governor wrote.

Brown did not comment in-depth in his announcement Wednesday. But he took the Labor Department to task in another letter.

“California’s pension reforms stand in stark contrast to partisan efforts in other states expressly designed to limit the collective bargaining rights of union members,” he wrote. “Given this contrast, I cannot help but be frustrated by your department’s position.”

Newly appointed Labor Secretary Thomas Perez responded in his own letter: “Recently, Wisconsin, New Jersey, Ohio and Massachusetts all passed laws that reformed the collective-bargaining process, but in each case the transit agency, unions and the state came up with solutions in order to avoid a conflict (with federal law),”

In that letter, Perez suggested an exemption for transit workers so the federal grants would not stop — which is what Brown is now proposing.

Assembly Bill 1222 is expected to go to the floors of both houses before the Legislature adjourns for the year Sept. 13.